The Red Lake Band of Chippewa in northern Minnesota intends to build enough solar energy capability on tribal lands over the next several years to free itself from electricity generated from fossil fuels.
And, thanks to outside investors who can tap a variety of tax credits, depreciation and deductions, it should cost the tribe very little to eventually become owners of the solar arrays, power-storage units and related equipment.
The project is expected to deliver up to 25 megawatts of power at an installed cost of up to $40 million under a three-phase, several-year plan that would cover three casino rooftops, as well as several tribal corporate buildings, ground arrays and, eventually, house rooftops.
The tribe, which has about 13,000 members living on reservation lands, seeks to reach an environmental-and-economic empowerment goal through generating its own clean energy.
"Renewable energy harnesses the natural forces of life, of nature, which provides the foundation for who we are as native people," Eugene McArthur, the tribe's economic development executive, said at a presentation of the project.
The veteran project developers and the tribe say the deal makes economic and environmental sense.
David Winkelman, a solar-project consultant who represents St. Paul-based Innovative Power Systems, a 25-year solar installer, approached the tribe in 2014 and worked with McArthur on the that has been approved by Red Lake Chairman Darrell Seki Sr. and the tribal council.
The first phase involves constructing solar arrays atop three casinos and large tribal buildings, and installing storage batteries. Construction could start as early as next spring, said Winkelman and Robert Olson, a Minneapolis tax lawyer and owner of Olson Energy Corp., another player in the development.
"The investors probably will be a large national bank and a couple Fortune 500 companies," Olson said.
Olson recruits institutional investors eager to invest in green power who get their return from energy sales, a federal investment tax credit of 30 percent, and tax-deductible accelerated depreciation over several years.
The plan calls for the original owners to take a charitable deduction when they donate the equipment to the tribe after five years.
"This is a natural thing for the Red Lake tribe who have wanted to live closer to nature," Olson said.
The tribe, which estimates it will in time save up to $2 million a year on its electric tab, will eventually own the project. Also, Red Lake members will be trained to work for a future Red Lake solar management and maintenance business.
The deal is more "complicated and expensive" than other alternative energy projects Winkelman has worked on, because on-site power-storage is required. Several small utilities that now provide the tribe with power are not equipped or required under state law to accept power generated off the grid, Winkelman said. Only Duluth-based Minnesota Power, which would work with the tribe on solar farms totaling 10 to 20 megawatts, could accept the power. It also operates under a state mandate for big utilities to increase their portfolio of alternative-energy projects through 2025.
The contractor is Winkelman Building Corp., a St. Cloud-based builder that specializes in energy-conserving and alternative-energy construction. Winkelman said the firm was started by his family in 1970. It was later sold to employees.
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.